The lead indicator for Dion Hershan’s best trades (and two high quality stocks for the ”slow grind” ahead)

Dec 20, 2023

Ask episode

Chapters

Transcript

Episode notes

Two years ago, on a trip to Perth, Yarra Capita’s Dion Hershan was pitched the case for lithium stocks by his Uber driver. Hershan says it was a cliche moment and a classic example of a ‘ringing the bell’ sign. On the flip side, there are moments when deciding to invest causes your stomach to churn and your hands to quiver.

“Some of the best ideas I’ve had in my career were when my stomach churned and my hands trembled when I put the trade on. That’s often a good lead indicator.”

Recent investments in fallen angel ResMed (ASX: RMD) and an overweight position in the beaten down REITs sector are two examples Hershan provides of how Yarra is taking long-term counter-consensus thinking.

This counter-consensus thinking also applies to the companies Hershan and his team are cautious about, which include large parts of the ASX20, including resources and banks. Hershan says that while these companies may not fall out of the top 20, their best days are likely behind them.

In this episode of the Rules of Investing, Hershan talks about the lessons from working inside the most successful global hedge fund, why he is cautious about the outlook for blue chips and the companies he thinks represent the best long-term opportunities for the slow grind that lies ahead.

Timestamps

0:00 - Introduction
3:06 - How Dion caught the investing bug
4:40 - Lessons from working at Citadel
8:35 - Why macro matters for Australian equity investors
11:08 - The raging debate taking place at Yarra Capital
14:30 - How much pain will consumers feel in 2024
17:29 - Why you should be complacent about blue chip stocks
22:05 - The best opportunities Yarra is finding on the ASX
24:57 - A fallen angel that Yarra thinks can rebound
26:52 - The thesis for being overweight REITs
36:00 - What investors are getting wrong in markets today
37:15 - Lessons from an early win
38:32 - Two stocks Dion would be happy to back if the market shut for 5 years

https://www.livewiremarkets.com/wires/five-themes-on-our-shopping-list

https://www.livewiremarkets.com/wires/avoiding-the-blue-chips-heading-for-small-cap-status